Group Bookings Increasing

Group travel is seeing a global rebound, with advanced bookings to The Bahamas now climbing to pre-recession levels, according to the Bahamas Hotel Association (BHA).

Group travel accounts for a little more than a quarter of the stopover business in The Bahamas, according to BHA president Stuart Bowe. It suffered during the recession, but Bowe told Guardian Business yesterday that advanced bookings for the balance of the year and into the next are heading in the right direction.

“Advanced bookings for groups are up considerably and now approaching pre-recession levels. Group business, predominately comprised of business-related groups, represents just over 25 percent of our business,” Bowe said. “Advanced bookings thru 2012 are promising.”

The group travel business impacts on a hotel’s operations in a meaningful way that goes beyond the percentage of occupancy it accounts for. In a November Guardian Business report, George Markantonis, president and managing director of Kerzner International Bahamas, explained the importance of these travellers to a resort’s operations.

A strong group base relieves the downward pressure on room rates, allowing hotels to maintain higher prices for their entire room inventory, Markantonis explained. Hotels could therefore see higher room receipts and usually a healthier bottom line. He added that even industry experts had underestimated how hard it would be to recover lost corporate profits from the fall-off in group business.

The news of strong advanced group bookings coincides with numbers recently released in GetThere’s Corporate Travel Benchmark Report April 2011. GetThere is a leading provider of travel, expense and meetings management services for international corporate travelers.

According to the report, there were signs of a steady recovery in corporate travel in 2010, a trend that is expected to continue into 2011, according to the report. More corporate travel roughly translates into more group travel business. Around 61 percent of the respondents to GetThere’s survey in the report expected their corporate travel budgets to increase this year compared to last year, by anywhere from one to 10 percent.

A third of respondents in the report noted a slight increase in travel spending in 2010, with another 11 percent reporting a considerable increase, and 22 percent saying spending levels remained about the same.

A tax convention credit for US persons became effective in 2006 and played into how the industry postured itself in regard to this valuable segment of the travel market. As a part of the tax information exchange agreement between the United States and The Bahamas, signed in 2002, a provision was made for US taxpayers to deduct the cost of attending a conference or convention in The Bahamas from income, just like they can if the event was held in the United States. It was a significant development that led many Bahamian hoteliers to upgrade and expand their meeting facilities.

“Hotels like Atlantis took a look at the added potential due to the tax credit and put additional resources into promoting and supporting group business,” Bowe said. “Targeted marketing efforts were undertaken by the Ministry of Tourism and hotels to capture group business, and by 2006 we were well positioned to do this.”

But along came the recent global recession, which Bowe said impacted group business unlike any previous economic downturn. It was exacerbated after American insurance conglomerate AIG hosted a $370,000 retreat in 2008, a week after receiving an $85 billion bailout from the US Treasury. The ensuing coverage made corporate group travel a lot less fashionable.

“We suffered tremendously from the ‘AIG effect’ and not only in terms of corporate budget slashes for travel, but it also became unpopular for businesses to be seen travelling to places like Las Vegas, Orlando and The Bahamas,” said Bowe.

But Bahamian hoteliers and tourism experts may have come out of the experience having learned a few lessons about attracting the leisure traveller. Funds were directed into advertising aimed at the leisure tourist, and value added promotions were rolled out to lure that market to our shores, according to Bowe.

“As a destination we have had to work extremely hard to capture a larger share of the leisure travel market,” the BHA president said. “In the context of understanding our group dependence and what we needed to do to compete globally for a smaller leisure market, a pie which every other destination was vying for, we fared better than most.”

The indicators pointing to a global revival of group travel business and the bookings the industry is already seeing are good signs for hotel operations and profitability. The industry may even be a little stronger in its marketing efforts for both leisure and group travelers after surviving the recent economic downturn.

“We’ve gotten better at capturing market share of the leisure business and have become much more aggressive in attracting new group business,” Bowe said. “This should bode well for the future.”